The U.S. Consumer Financial Protection Bureau hasn’t fielded as many complaints about credit cards as it anticipated when it began operating last year, its director said.
“We have fewer complaints about credit cards than I would have expected,” Richard Cordray, the CFPB’s director, said today at a hearing of the Senate Banking Committee, where he presented the bureau’s semi-annual report to Congress.
The CFPB started a consumer response system on July 21, 2011, and began by taking complaints on credit cards. It subsequently expanded the system to include mortgages on Dec. 1, then bank accounts and services, private student loans, and consumer loans on March 1.
Cordray attributed the lower-than-expected volume of complaints on credit cards to the Credit Card Accountability, Responsibility and Disclosure Act of 2009, which banned a number of practices that Congress deemed abusive, and to the industry’s efforts to improve customer service.
As of Sept. 3, the bureau had received 72,297 complaints in all categories, which he described as “a significant number and a number that is increasing over time.” Complaints are now flowing in at an annualized rate of 120,000 per year, and the largest number deal with mortgages.
“We have no idea when that will level off or where it will level off,” Cordray said.
Cordray praised the behavior of Capital One Financial Corp. (COF), which concluded a $210 million settlement with CFPB and the Office of the Comptroller of the Currency in July.
Capital One “responded extremely responsibly to the problem when it was identified,” Cordray said. “They were as distressed and concerned as we were.”
Cordray said the CFPB initiated the case, and said it should serve as a warning to other credit card issuers supervised by the agency to avoid similar practices. “We very much want and intend for them to do that.”
Cordray also confirmed that the CFPB will write a regulation on prepaid debit cards. It asked interested parties for comment on the business in May, and Cordray said the cards available range from the “pretty responsible” to “pretty terrible and definitely exploitative.”
“We are going to write rules on prepaid cards,” Cordray said. “We are going to move forward in that area.”